An error has occurred while establishing a connection to the server. When connecting to SQL Server 2005, this failure may be caused by the fact that under the default settings SQL Server does not allow remote connections. (provider: SQL Network Interfaces, error: 26 - Error Locating Server/Instance Specified) (Microsoft SQL Server, Error: -1)

This simply means that udp port 1434 is not open on your network.A work around is to connect to your instance by using port 1503

mssqlserver\instance1,1503

We experienced this with our cluster servers and resolved it this way.